How long has it been since you evaluated your auto insurance liability limits?  If you’re like many people, you probably haven’t given it much thought since you purchased your first auto insurance policy 20 or 30 years ago. Experts agree, you should evaluate your liability limits every couple of years to ensure they are keeping up with your rising net worth and income.

When it comes to car insurance, most people have what are called split limits; where your liability limits are broken out into three numbers representing bodily injury per person, bodily injury per accident and property damage. I commonly see limits of $100,000/$300,000/$100,000. If a person carrying these limits causes an automobile accident, the insurance company would pay no more than $100,000 for lost wages, pain and suffering and medical bills to an injured person and no more than $100,000 in property damage. With the cost of medical care, $100,000 could easily get spent in 2-3 days at a hospital. If your liability limits are inadequate to pay the damages from a car accident you cause, your personal assets and future wages could be at stake.

Auto insurance policies rarely offer liability limits greater than $500,000 in damages per person, however almost all middle class families and higher net worth people need more coverage than $500,000. This is where personal umbrella policies can pick up where auto insurance policies leave off. Personal umbrella policies were first offered in 1949 to protect the assets of the wealthiest people. Due to inflation and larger personal injury settlements, umbrella policies are now commonly used to protect the assets and income of middle-class families.

Another benefit of umbrella policies is that not only do they extend over your car insurance, but they also extend over the liability limits of your home, rental properties, motorcycles, boats, RVs and other toys when setup properly. You’ve spent a lifetime building your net worth, don’t allow it to disappear in a judgement from one accident.

Umbrella policies start at $1,000,000 of coverage and can go as high as you need. In Colorado, if you cause an accident and you have inadequate liability coverage, not only can your assets be seized, but 30% of your earnings can also be garnished. An umbrella policy can help prevent a car accident from ruining you financially. You can expect to pay $150-$400 a year for a $1 million umbrella, depending on the characteristics of your household (number of drivers, number of cars, driving record, etc).

Check out 10 real umbrella claim stories at: